With the weather outlook stable overnight and the market turning its attention to weekly government storage data likely to show a lighter than average withdrawal from U.S. natural gas stocks, March Nymex futures were trading slightly higher early Thursday.
The March contract was up 3.3 cents to $2.608/MMBtu shortly before 9 a.m. ET after trading in a fairly narrow range overnight.
Estimates ahead of Thursday’s Energy Information Administration (EIA) storage report, set to release at 10:30 a.m. ET, have been pointing to a withdrawal in the 80 Bcf range for the week ended Feb. 8. A Bloomberg survey of 11 market participants had a draw range of 77-106 Bcf, with a median draw of 82 Bcf. A Reuters survey of 21 analysts had the same range, with a median of 84 Bcf. A poll by The Wall Street Journal of 10 analysts showed an average pull of 85 Bcf. Kyle Cooper of IAF Advisors projected an 88 Bcf pull, and EBW Analytics Group pegged the draw at 83 Bcf. NGI estimated a 73 Bcf withdrawal.
NGI started publishing gas storage withdrawal estimates earlier this month using a machine learning model that takes into account historical fundamental data, including heating/cooling degree days, past storage figures and ranges of expectations.
A storage draw in the 80 Bcf range would compare with last year’s 183 Bcf withdrawal for the week and a five-year average draw of 160 Bcf. Last week, EIA reported a 237 Bcf draw for the week ending Feb. 1, leaving inventories at 2,095 Bcf, 135 Bcf below last year and 415 Bcf below the five-year average.
Genscape Inc.’s estimate this week landed at a withdrawal of 85 Bcf. The firm’s estimate is a statistically weighted composite of its daily supply and demand data, which pointed to a pull of 75 Bcf, and its storage facility model, which showed a 90 Bcf draw.
Genscape daily pipe production estimates for the period indicated about 0.5 Bcf/d less supply versus the prior week because of freeze-offs and maintenance impacting Lower 48 output. But supply drops were “more than outpaced by demand easing” more than 25 Bcf/d on average for the week ended Feb. 8, mainly on the departure of the previous week’s polar vortex temperatures, according to the firm.
Bespoke Weather Services, which predicted an 82 Bcf pull, said this week’s report appears likely to be “uninspiring overall.”
“There is risk for a slightly more bullish print to our expectation, and that could prove quite supportive in a market that has sold off primarily due to recent loosening in the last few weeks,” the firm said. Even a pull in line with Bespoke’s 82 Bcf estimate “may be seen as relief as we see tighter numbers likely to be announced through the next few weeks.”
Meanwhile, overnight weather model guidance “stabilized,” adding a handful of gas-weighted degree days (GWDDs) to the long-range outlook, according to Bespoke. American Global Ensemble Forecast System guidance dropped a few GWDDs but “showed a very bullish pattern at the end of the run.
“There are reasons to be skeptical here, as the model has remained incredibly volatile and is struggling with upstream tropical forcing,” Bespoke said. “European model guidance showed a slightly less supportive long-range pattern but did add a few GWDDs overnight and appears set to sustain them moving forward as well.”
March crude oil was trading 29 cents higher at $54.19/bbl shortly before 9 a.m. ET, while March RBOB gasoline was up 2.1 cents to $1.4861/gal.
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